philipmax

The New Bull Market Fallacy

Superb article. Too long for one topic could have been split into four articles. Very comprehensive coverage.

Banks, Oligopolies and Ever-Rising Fees

I saw some blogs here heralding the virtues of credit unions. I'm a member of one. Nice people and all..but no great shakes on personal service and other embellishments referred to above... just the same ho-hum as other banks.

Banks, Oligopolies and Ever-Rising Fees

Why do think that the banks are working on behalf of their stockholders? If anything, the past 18 months have demonstrated that the banks have little regard for their stockholders, as well as, your well described abuses of their depositors.

By dropping the dividends to minuscule levels, ostensibly to shore up the capital base, the banks are stealing $50 Billion a year from the stockholders.

Then again, the banks issued new stock, without a public rights offering to the existing stockholders, further diluting the equity of the original stockholders. This was done in the last month when most bank stocks (of the top 19 ) are at a depressed level, causing further dilution by having to issue more shares than would ordinarily be required.

Instead, the banks are raising the base pay of their executives in order to come in under the Fed scrutiny of bonus fees. This will permanently raise the cost of doing business for the banks and reduce stock valuations.

There is nothing in the above behavior pattern that indicates that the banks have any regard for their stockholders.

Without some checks and balances on congressional lobby groups, you Oligopoly will soon turn to Monopoly.

Is There Any Limit to Bank Arrogance?

A lot of of logic in your article. Perhaps that is why your words of warning will go unheeded.

when the sharks are in an eating frenzy it is unwise to go swim in their midst.

It is so demoralizing to watch the banks literally suck the life juices from the economy through blatant acts of thievery.

Watch the Zombie Bank Lifeline

I would like to see the banks do "stress test" on the Treasury to see if it can survive in the next few years.

if the banks had done a proper "stress Test" on their loan applicants we wouldn't be in this pickle in the first place.

It looks like the only real "STRESS TEST" will be on the tax payers.

Banking Industry Watch: Quick Move from Bust to Boom

Great article. You said it best.

Time to Dismantle the 'Corporatocracy'?

I'm in total agreement. But how do you stop the "Beltway" from choking the system when it's growing even as the nation's economic base is shrinking? And how do we protect prudent money managers who limit corporate debt on their books only to be swallowed-up by wall street gang rapist? It won't be easy.

Death of the Big Bank Model

right on!!

Time to Bury the Rotting Carcasses of Dead U.S. Banks

I like your analysis but strongly disagree with your solutions.
Yes, there is a systemic failure, but it is of the entire global banking community. This is why conventional solutions are irrelevant. It is a worldwide banking pandemic.
It's not just the shifting of money from producer to consumer that caused this problem. IT WAS IRRESPONSIBLE LENDING that was marketed as triple A investments to the developing nations who put their faith and TRUST in our regulatory system that failed. We failed them, and now, they refuse to deal with us and we can't find other suckers to play with. The result is a freeze-up of the banking system and trade between nations that compounds the problem by involving the whole world economy.
No amount of punishment that we meet out to the stockholders will fix this mess. The stockholders are not the culprits. As long as banks continue to be run by the same criminal element that caused this mess, we are spinning around in hopelessness. We have to change managements and ethics in the entire banking industry or nothing will be achieved. Intervention and debasement of stockholders interests is not a solution.
Take this message to Washington!!

Nationalization: What Does Treasury Really Think?

Day after day I watch in wonderment and disgust at how fast and furious our entire economic system is spinning in an ever faster death spiral down. . I have lost all confidence in our system of CORPROTOCRACY where the management of the greatest corporations on earth have decided to plunder the very companies that they were entrusted to protect and grow.
I watch as the politicians carve up the future tax revenue stream to line the pockets of their corporate buddies (who repay them through lobbyist donations).
I watch the stock market collapse at the realization that the stockholders are the patsies for these anarchists and thieves.
Each day i wonder how and when will the voice of the people will be heard and the sense of justice will prevail.
And every day I become more and more jaded as I realize that only when the capitalistic system totally fails will these knaves be eliminated. By then they will have taken everything of worth leaving our nation just a gutted out shell of its former self.

Why Bank Nationalization Will Never Happen

This is one of many good articles at Seeking Alpha. As a stockholder in numerous banking institutions, I am directly affected by the national banking policy.
i see this crisis as a watershed mark in the capitalistic system that developed over the past 300 years. There have been many bank credit induced panics and depressions in England and the USA over this time period and the economies somehow recovered and grew in the ensuing years. This time, however, we are confronted with a simultaneous global breakdown that threatens to literally destroy the whole banking institution at once. Without a viable banking system, the economic underpinning of the capitalistic system collapses.
The paramount issue now is to save the "system". the Paulson/Geitner solution has been to throw money at the banks to shore up their capital. This sounds good and may be do-able were that their "capital needs" were quantifiable.

Sadly, even the banks themselves are not sure of the extent of their capital shortfall. The derivative portfolios leave such huge potential liabilities that everyone is afraid to even attempt to quantify them ($60 trillion to $130 trillion have been bantered about).
So what else can be done. That is when the concept of nationalization started to creep into the equation. I am sorry to say that this concept is D.O.A. because it will destroy the foundation of independence of the economic system and render it stagnant, leaving us with a Soviet like economy subject to corruption and mismanagement (not that free markets insulated us from this).

The problem remains in that the banks are paralyzed. When they lent the money out, they were able to leverage their deposits at a rate of 8:1, i.e. they were able to lend 8 times the value of their "deposits". Deposits are many times the amount of "capital" or equity that a bank has. When a bank's loans go into default the bank take a direct hit to its "capital" for every dollar lost. When the capital is exhausted, the bank becomes insolvent, or bankrupt. We can imagine the extent of the potential damage when we contemplate the number of defaulting mortgages, car loans, and credit cards. With all of these loss absorptions, the bank are left unable to issue new loans because they don't have enough capital to absorb any additional losses.

So the answer has to lie with raising more "capital" for the banks to function. But how are we going to do so when the stockholders (read: capital holders) are systematically decimated by the policies of the SEC and the exchanges. Having eliminated the long standing rules that prohibited the short-sellers to sell "naked" and demolishing the "uptick" rules, the markets have destroyed $1.5 Trillion in bank valuation, thus scaring the B-Jesus out of the stockholders and foreclosing future stock or capital issuance.

Until the market understands this truth, I fear it would continue stumble and shrink.

America's Banks: Are They Really Insolvent?

The banks are indeed in trouble. Every dollar in loss in magnified 8 times in capital loss, so it is very easy to understand that they are teetering.

On the bright side, with the cost of borrowing from the Fed reduced to zero, the banks are making huge returns on their loan portfolio. This should generate extraordinary income which will be used to offset some of these write-downs.
The hope that the profits will shore up the loss provisions, the problem remains that no one is sure of how deep these write-downs will be.

Avery pernicious attack of greed by the banking industry (bonus plans based on business written) combined with utterly lax (negligent) oversight by regulators united to create an atom bomb that threatens to destroy the capitalist based economy.

Where's the Nationalization Debate?

HEAR HEAR CHRIS!
Repeal of the Glass-Steagal in 1997 was the core cause of the banking debacle.
The second and just as important was the gutting out of the enforcement mechanism layered into the the regulatory system. the result was Bedlam.

Oh When will they ever learn?

Where Citigroup Went Wrong

I was lucky to be fired by Weill twice. Once. when he took over Hayden Stone the venerable brokerage firm that Joe Kennedy built. And again, in a Friday night mid-night raid that took Shearson Hammill down with the conniving aid of Citibank.

Shearson was the best of the best on Wall Street until Weill's goons ruined this jewel.

Good riddance to the bunch of them. They won't be missed.

GM: More Bailout-Worthy than Citigroup

To Robert Nabloid posted 12/6 7:11PM

Good points.
Just to let you know why I have no compassion for the likes of GM. In 1947,when Tucker made his famous revolutionary vehicle, with features such as headlights that turned the corner with the turn of the steering wheel, it was only short lived.
Tucker was forced into bankruptcy by the BIG THREE auto makers who threatened the steel mills with boycott if they supplied Tucker with even one pound of steel.

What goes around comes around.

The know-nothing congress will grant the "loans" which will in turn become gifts to GM & Ford.